NEW DELHI, Sep 16 (TIWN): Rising global crude oil prices have emerged as a major concern for Indian markets, with Brent crude trading above the psychologically important $100-a-barrel level and moving close to $110.

Brent crude rose sharply amid supply concerns linked to developments in the Middle East. On Tuesday, Brent prices climbed above $108 a barrel, contributing to a broad decline in Indian equities and putting additional pressure on the rupee.

For India, higher crude prices have wider economic implications because the country imports a large share of its crude oil requirements. When international oil becomes more expensive, the country's import bill can rise, potentially affecting the trade balance and putting pressure on the domestic currency.

The rupee closed at ?95.955 against the U.S. dollar on September 15, marking its seventh consecutive session of decline. The currency has lost around 1.5% over those seven sessions, according to Reuters.

The weakness in the rupee can further increase the domestic cost of imported crude because oil purchases are largely denominated in U.S. dollars. This creates a potential challenge for inflation if elevated crude prices persist.

Bond markets are also reacting to the changing environment. India's 10-year government bond yield reached a four-month high as investors assessed the possibility of stronger inflationary pressure and potential changes in monetary policy.

The pressure is not limited to the currency and bond markets. Indian equities fell sharply on Tuesday, with the Nifty 50 dropping 1.19% and the Sensex declining 1.04%. Financial and automobile stocks were among the sectors affected, while information technology stocks provided some support.

The global interest-rate outlook is another factor. Markets are closely watching the U.S. Federal Reserve's upcoming decision, with expectations of a rate hike adding to pressure on emerging-market currencies.

The Reserve Bank of India has been monitoring currency-market volatility and was reported to have intervened on Wednesday as the rupee remained under pressure.

For India, the direction of crude prices over the coming weeks will therefore remain important for inflation, the rupee, imports and financial markets.